Builders Risk insurance — also known as Course of Construction insurance — protects structures under construction against physical loss or damage during the building process. Without it, a fire, storm, or theft event mid-project can result in catastrophic uninsured losses.
What Does Builders Risk Cover?
The Structure Under Construction: The building or structure itself, including materials permanently installed or to be installed in the project.
Materials and Supplies On-Site: Lumber, steel, fixtures, and other construction materials stored at or near the job site.
Materials in Transit: Many policies extend coverage to materials while being transported to the job site.
Soft Costs: Some policies include coverage for additional expenses caused by a covered loss — architect fees, permit re-application costs, carrying costs, and financing charges incurred due to a delay in project completion.
Common Covered Perils
- Fire and explosion
- Wind and hail
- Lightning
- Theft and vandalism
- Collapse
- Certain water damage
What Builders Risk Typically Excludes
- Employee theft
- Mechanical breakdown
- Faulty design or workmanship
- Flood and earthquake (require separate coverage)
- Damage to property after project completion (transitions to property policy)
Who Should Buy Builders Risk?
The obligation to purchase Builders Risk is typically defined in the construction contract. Generally:
- Property owners / developers typically purchase Builders Risk on ground-up construction
- General contractors may be required to purchase it under the contract, or provide it for renovation projects
- Lenders often require Builders Risk as a condition of construction financing
Subcontractors do not typically purchase Builders Risk, but they should ensure they are named as additional insureds on the owner's or GC's policy.
Project Duration and Policy Period
Builders Risk policies are written for a specific project period. If the project runs over schedule — which is common — the policy must be extended or a gap in coverage may result.
Work With Capital & Co
Capital & Co can help owners, developers, and contractors structure Builders Risk programs for projects of any size, from residential renovations to major commercial construction.
Questions About Your Coverage?
Speak with Capital & Co about a strategy built for your business.
